New accounts help disabled Arizonans save

When it comes to savings, Arizonans with disabilities often face a catch-22.

If they set aside too little, they might not be able to cover all disability-related costs.

If they save too much — more than $2,000 — they might lose government benefits.

As of Monday, Arizona has a workaround: AZ ABLE accounts, which allow residents to put away up to $15,000 a

year for disability-related expenses without risking other sources of financial support.

The investment accounts can be opened by or on behalf of someone with a disability, with funds available for everything from tuition and transportation to hearing aids and summer camp.

Beneficiaries have two chances to change investment options per year, and any interest earned is taxfree.

“I want to do everything I can to plan and prepare for my children’s future,” said ABLE Oversight Committee member Karla Phillips, whose daughter was the first to sign up for an AZ ABLE account. “While each of my children is unique and has their own special abilities, the ABLE Act recognizes that our expectations should be far-reaching for all children.”

Here’s a closer look at how the new accounts work and who can take advantage of them.

How much can you save with AZ ABLE?

AZ ABLE accounts have a $15,000 annual limit and a $462,000 lifetime cap.

Beneficiaries can save up to $100,000 before affecting Supplemental Security Income benefits and up to

$450,000 before affecting Medicaid benefits.

Friends and relatives can contribute to a beneficiary’s account.

How can you use the money?

Some examples of approved disability expenses include:

Education costs such as tuition, books and supplies.

Housing costs such as rent, mortgage payments, property taxes and utilities.

Transportation costs such as transit passes and vehicle purchases.

Employment costs such as moving expenses and job training.

Health and wellness costs such as health-insurance premiums, medical equipment, therapy, respite care, nutritional management and assistive technology. Miscellaneous costs such as legal fees and funeral and burial expenses.

You should keep records of what you pay for because the IRS can request documentation.

What are the advantages?

In addition to allowing greater savings without interfering with government benefits, AZ ABLE accounts aren’t subject to state or federal income taxes if you

spend earnings on disability-related items and services.

After opening an account, you can load a prepaid debit card with funds and use it in any location that accepts MasterCard.

Who qualifies?

To open an account, a person must be an Arizona resident and have been diagnosed with a disability before age 26.

The person must also either:

Receive Social Security Insurance or Social Security Disability Insurance because of a disability.

Have a condition listed on Social Security Administration’s “List of Compassionate Allowances Conditions.”

Provide documentation from a physician confirming the person meets disability criteria.

The parent, legal guardian or power-of-attorney holder for a person who meets the above requirements can also open or manage an account.

How do you start the process?

You can apply online here.

You must put at least $50 in the account to begin and pay a monthly maintenance fee of $3.50.